Complying with the DAC7 in Spain

     I. Introduction

With the publication at the Official Gazette of Royal Decree117/2024 (hereinafter, the DAC7 Ordinance), of 30 January, that develops the rules and procedures of due diligence for the purpose of the automatic exchange of information provided by the platform operators resulting from the transposition of Directive 2021/514 (hereinafter, the Directive or the DAC7) and the Ministerial Order HAC/72/2024, of 1 February (hereinafter, the DAC Order), approving the census and reporting forms 040 and 238, and once published at the website of the Spanish Tax

Agency the schemes of the messages for reporting the required DAC7 information via the habilitated web service, the transposing the Directive is completed.

     II. Who are obliged to comply with the DAC7 in Spain?

Those companies within the scope of the DAC7 (“Platform Operators”)[i] ,when having to comply with the

obligations resulting from the Directive (“Reporting Platform Operators”)[ii], woul to do it before the Spanish tax authorities when Spain is the competent Member State according to the provisions of the Directive[iii].

This would be the case, and Spain would be the competent Member State, when the “Platform Operator” is a company or legal entity in any of the following situations:

a) Is a tax resident in Spain or,

b) Is not a tax resident neither in Spain nor any other Member State but any of the following conditions (connection points) are met:

• Has been incorporated according to the Spanish legislation.

• The business site or the effective management is in Spain.

• The “Platform Operator” has a permanent establishment in Spain and is not a “Qualified Non-Union Platform Operator” (see point a) of note III).

If any of these conditions is met both in Spain and in another Member State, the Spanish tax authorities would be competent for DAC7 reporting purposes if Spain is the Memember State of election.

c) The “Platform Operator” is a tax resident or, failing to meet this requisite, is incorporated or managed in a country that is outside the EU and is not a “Qualified Non-Union Jurisdiction” (see point a) of note III), and it has chosen Spain as the Member State of single registration, according to subparagraph A (3) of Section III of the Annex V of the Directive.

     III. Which formal obligations are to be complied with?

When Spain is the competent Member State, the obligations to be complied with by “Reporting Platform Operators” (see note II), will be those regulated in Sections II and III of Annex V of the Directive, as transposed by the mentioned DAC7 Ordinance and the DAC7 gOrder, that is:

     III.1. Registration before the Spanish tax authorities:

Filing of electronic census form 040 at the website of the Spanish Tax Agency, so to be included at any of the DAC7 special registers and, when applicable, obtain the DAC7 individual identification number mentioned in subparagraph 4 of article 8ac of the Directive.

So, depending on the type of applicant, the “Reporting Platform Operator” will have to register at any of the following:

a) At the “Register of non-qualified foreign platform operators”, for the case of “Reporting Platform Operators” from outside the UE meeting any of the connection points referred to in subparagraph A (4), point b) of Section III of Annex V of the Directive (see point b) of note III), when it choses Spain for the purposes of the DAC7 single registration of obtention of the individual identification number mentioned in subparagraph 4 of Section ,Article 82c of the Directive.

b) At the “Register of other platform operators obliged to communicate information”, for the case that the applicant being any of those “Reporting Platform Operators” for which Spain is the Member State to report for DAC7 purposes, because of meeting any of the connection points referred to in subparagraph A (4), point a) of Section III of Annex V of the Directive (see point a) of note III),that is:

• They are tax residents in Spain, or, if not,

• Any of the connection points is met in Spain and not in any other Member State.

• If any of the connection points is met not only in Spain but, also, in any other Member State, for the case Spain is the Member State of election so to comply with the DAC7 obligations.

The filing requires the “Reporting Platform Operator” to have an electronic signature certificate that is homologated by the Spanish Tax Agency. A third party having such a certificate who has the status of tax collaborator before the tax authorities (i.e. a tax advisor) can also do the filing on its behalf.

The obligation to register commences from the moment that the “Reporting Platform Operator” initiates its activity as such, but for the first registration in Spain, the obligation starts the 6 February 2024 when the DAC7 Order come into force.

After the registration, the “Reporting Platform Operator” will also be obliged to report any change as to its DAC7 census status.

     III.2. Data reporting:

When Spain is the competent Member State as described above, “Reporting Platform Operators” will be obliged to report to the Spanish tax authorities the information mentioned in number 2 of Section III of the Annex V of the Directive as detailed in Annex II of the DAC7 Order, for all “Reportable Sellers” [iv] operating at the platform, except when the “Platform Operator” decides to report only the “Active Sellers” (namely, those who have incurred “Relevant Activities” during the period to report) for the corresponding “reporting period”, that is, the calendar year.

This required information - i.e. personal data, primary address, Member/s State/s of residency or where there is a PE, financial account identifier, property listing, total “Consideration” and expenses applied by “platform”, number of transactions - will have to be reported by using the electronic form 238, to be filed at the website of the Spanish Tax Agency, by any of the following procedures:

a) Uploading an XML report that meets the technical requirements published by the Spanish Tax Agency in its website, by registering as client at the web service habilitated therein.

b) Completing the electronic form 238 accessible at the website of the Spanish Tax Agency.

c) Although not obliged to report the “Sellers” information, the following “Platform Operators” must still file form 238 so to provide certain personal data by completing the electronic form (negative) accessible at the website of the Spanish Tax Agency:

“Excluded Platform Operators”- those whose business activity does not involve external “Sellers” - must file a negative form 238 on a yearly basis to the tax authorities so to declare the personal data of the reporting platform mentioned in subparagraph A of Annex II of the DAC7 Order.

• “Excluded Platform Operators”- those whose business activity does not involve external “Sellers” - must file a negative form 238 on a yearly basis to the tax authorities so to declare the personal data of the reporting platform mentioned in subparagraph A of Annex II of the DAC7 Order.

• “Reporting Platform Operators” meeting any of the connection points of subparagraph A (4) a), of Section III of Annex V of the Directive (see point a) of note III) in Spain and another Member State or “Qualified Non-Union Jurisdiction” and have not chosen Spain for reporting purposes. Besides reporting in the Member State of election, they must also file a negative form 238 on a yearly basis, so to inform the Spanish tax authorities of the personal data mentioned in subparagraph A of Annex II of the DAC7 Order corresponding to the reporting platform, along with its own name, tax identification number and address in the country where the DAC7 information is declared.

• The DAC7 Ordinance contemplates the possibility that a “Reporting Platform Operator” obliged to report before the Spanish tax authorities, proves that the required information has already been reported by another “Reporting Platform Operator”. For such a case, it must file a negative form 238 on a yearly basis, so to inform the Spanish tax authorities of the personal data mentioned in subparagraph A of Annex II of the DAC7 Order corresponding to the reporting platform.

The filing requires the “Reporting Platform Operator” to having obtained a Spanish Tax Identification Number (NIF) and have an electronic signature certificate that is homologated by the Spanish Tax Agency. A third party having such a certificate who has the status of tax collaborator before the tax authorities (i.e. a tax advisor) can also do the filing on its behalf.

The deadline for filing form 238 is the 31^st of January of the year following the one that constitutes the “Reporting Period”. However, as regards 2023, this been the first “Reporting Period” to declare, the deadline is the 6 April 2024, that is, two months after the DAC7 Order comes into force.

     III.3. Due Diligence Procedures:

Articles 1 to 8 of the DAC7 Ordinance regulates the “Due Diligence Procedures” mentioned in Section II of Annex V of the Directive, which purpose is to be able to identify the “Reportable Sellers”, relating to:

a) Evidence required for determining if a “Seller” qualifies as an “Excluded Seller”.

b) Collection of “Seller” information (personal or company data, including tax or VAT identification number, when existing, date and place of birth, main address (see article 8 of the DAC7 Ordinance for the assumptions about the “Seller” country of residence), as well as, when a company, detail of permanent establishments in other Member States).

c) Verification of “Seller” information, including the Member States where the “Seller” is resident for DAC7 purposes according to letter D, Section II of Annex V of the Directive,

In line with letter F, Section II of Annex V of the Directive, article 7 of the DAC7 Ordinance regulates the deadline and validity for future periods of the due diligence procedures.

These rules and procedures will be in force since 1^st January 2023 and will have to be completed by the 31 December, applying to all the “Sellers” unless the “Reporting Platform Operator” decides to reduce the scope only to “Active Sellers”.

The compliance can be outsourced with a third-party service provider, but the responsibility will always remain in the “Reporting Platform Operator”.

The “Reporting Platform Operator” must keep records of the procedures and evidence used for the compliance with these due diligence obligations during the 10 years following the “Period of Reference”.

     IV. Penalties

Number 2 of Additional Provision twenty-fifth in the General Tax Law 58/20023, of 17 December, introduced by Law 13/2023, of 24 May, so to transpose the obligation to comply with the DAC7 in Spain, regulates the specificities of the penalties regime for uncompliant “Reporting Platform Operators”, including special penalties and, also, for the case of the “Sellers” failing to provide the “Platform Operator” the information they are obliged, the possibility of deregistration from the platform.

12 February 2024

[i] According to subparagraph A (2), of Section III of Annex V of the Directive a “Platform Operator” is a legal entity (not an individual) which contracts with “Sellers” the access to a Platform, that is, a website or any software, including mobile applications, accessible by users and allowing “Sellers” to be connected to other users for the purposes of their carrying out, directly or indirectly, any of the activities within the scope of the DAC7 (the, so called “Relevant Activity” according to subparagraph A (8), of Section III of Annex V of the Directive).

Those “Platforms” which only functions are those mentioned in letters (a), (b) and (c) of said subparagraph A (2), of Section III of Annex V of the Directive would be excluded from the application of the DAC7.

[ii] Not every “Platform Operator” must comply with the DAC7, as it only applies to those qualifying as “Reporting platform operators” where the so, called, “Excluded Platform Operators” are not taken into consideration, namely:

1. Any “Platform Operator” which can demonstrate in a yearly basis before the tax authorities of the competent Member State that the entire business model of the “Platform” is such that there are not transactions to report.

1. Any “Platform Operator” that does not meet any connection points that trigger the obligation to comply with the DAC7, that is: any of those contemplated in letters a) and b) of subparagraph A (4) of Section I of the Annex V of the Directive (see Note III).

[iii] According to points 1, 2 and 3 of Subparagraph A of Section III of the Annex V of the Directive, the competent authority will be the one of the Member State determined in accordance with points (a) and (b) of subparagraph A (4) of Section I of said Annex, where the following connection points are established, and which refer to:

1. Personal circumstances related to the tax/mercantile status of the “Platform Operator”, namely:

Being a tax resident in a Member State or, should it not be the case, any of the following conditions are met:

• The company is incorporated under the Laws of a Member State.

• The place of management, including the effective management, is in a Member State.

• There is a permanent establishment in a Member State, except for the case that the “Platform Operator” is a “Qualified Non-Union Platform Operator”, that is, is a tax resident or, if not, is incorporated or has its place of management in a non-UE country considered a “Qualified Non-Union Jurisdiction” (i.e. has an automatic exchange information agreement similar to the DAC7 with the competent authorities of all Member States and appears at the corresponding official list).

1. Objective circumstances related to the operative of the “Platform Operator”:

When a “Platform Operator” is not a tax resident, nor is incorporated or managed in a Member State but facilitates the carrying out transactions incurred by “Sellers” that are reportable for DAC7 purposes, who are resident in a Member State or relate to immovable property located in a Member State. As an exception, this provision will not affect to "Qualified Non-Union Operators".

[iv] So to determine which “Sellers” are eligible for data reporting purposes, the Directive differentiates:

1. “Active Sellers”: Those who within the “Reporting Period” have incurred in a “Relevant Activity” within the “Platform” or have been Credited with any “Consideration” related thereto.

1. “Excluded Seller”: “Sellers” who, regardless of being active or not, are excluded from the scope of the reporting obligation. These are:

• Governmental Entities.

• Market stock “Entities” or related to a market stock “Entity”.

• “Sellers” excluded based in the number of “Relevant Activities” they are facilitated by the “Platform” during the “Reporting Period”:

• Activity consisting of rental of immovable property: More than 2,000 transactions.

• Activity consisting of sale of Goods: Less than 30 transactions when the Consideration paid or credited did not exceed EUR 2,000.

1. “Reportable Seller”:

Sellers” operating at the “Platform” who, considering the above comments, are eligible for reporting purposes, so any “Active Seller” who is not an “Excluded Seller” who, also, are resident in a Member State or rents immovable property that is located in a Member State.